Major
Considerations In Deciding To Sell You Restaurant,
Bar Or Club
Here are a list of
major considerations you should include in deciding
to sell your restaurant, bar and/or club:
1. When do I want to retire or change careers? It is
more advantageous to sell your restaurant in a time
frame that is planned out rather than having to sell
quickly as your health is failing or the business is
not doing well financially. Once a restaurant is
listed for sale, if it is priced correctly, it takes
an average of four to six months to sell. Frequently
an owners business is in trouble financially or the
owners health is failing and they have to sell
quickly and consequently they have to sell the
business for far less than they would normally
realize. If you want to retire or change careers all
of the items listed below should be addressed. If
the answers to most of the questions listed in
numbers 2 to 6 below are positive then it is
probably the right time to sell and realize the
maximum price for your business.
2. Do I have a reasonable premises lease? The
premises lease is one of the most important aspects
in determining the value of your business. Most
buyers want a ten year lease that has a base term of
at least five years with one five year option. The
rent should be reasonable for the area with modest
yearly increases and the there should be a formula
for determining the rent in the option period that
is fair to both the operator and landlord. If the
lease is for less than ten years and the terms and
conditions of the lease are unreasonable, the value
of the business will be reduced dramatically. In
some cases if the lease is unreasonable it will not
be possible to sell the business.
3. What is the physical condition of the restaurant?
The restaurant should be in good condition
physically before it is put on the market. If you
want to buy a car whether it is used or new you
expect it to be in good condition, i.e. the interior
is clean, the exterior is waxed, etc. Similarly in
your restaurant all of the equipment should be in
good working order, the floors, walls and ceilings
should be clean and overall the restaurants
appearance inside and outside should have good curb
appeal.
4. What is the state of the economy? Past history
has proven that bad economic times are good times
for buyers and bad times for sellers. During bad
economic times a lot of restaurants are in trouble
and prices of restaurants are dramatically reduced
and it is easier to sell restaurants as they are
priced on the low side. Needless to say this is not
a time when you want should sell your restaurant.
5. What is the desirability of the location? As most
of you know this is one of the most important
questions in analyzing the value of your business.
If an area is strong, (areas with new economic
development with new hotels, shopping centers or
business parks), buyer demand is typically very
strong in these areas. Conversely in areas where:
1) the zoning is
changing do to neighborhood pressures and
operating hours for businesses are being
curtailed,
2) there is too
much competition in the area, and
3) there are
future negative things planned for the area (a
major tenant in the area is vacating and won’t
be replaced or a major construction project will
be going on in the area that will last for
several years which will detour the vehicular
traffic from that location, etc.) all of these
items will reduce the value of your business.
6. How is the
restaurant doing financially? If a buyer is
considering buying you business based largely on the
financial condition of your business, they are
expecting the business to be profitable. When I say
profitable they want to pay between 1 1/2 to 3 times
yearly net cash flow for the business and they want
to feel that the future prospects for maintaining
and increasing this profitability is strong.
Restaurateur of the Quarter - A Tale Of Two
Steves
Steve Grant and Steve
Simmons are the new managing partners of Savanna
Grill in Corte Madera. Both of these talented men
have extensive backgrounds in the restaurant
business. Steve Grant’s expertise comes from over 25
years in opening and managing restaurants including
the famed mc2 Restaurant and Thirsty Bear Brewing
Company in San Francisco and the renowned Engine
Company No. 28 in downtown Los Angeles. His approach
to Savanna Grill is to make it a friendly, warm,
soul searching and memorable environment.
Steve Simmons is a true celebrity chef known to may
in the Bay Area. He built his reputation as former
chef de cuisine at both Lark Creek Inn in Larkspur
and One Market in San Francisco. As the
owner/operator of Bubba’s Restaurant in San Anselmo
the past five years, Steve has established himself
by cooking for captive audiences who line up for his
down home fare. Now with a larger venue, he will
promote an American grill and bar concept focusing
on dishes from the American South. With Steve
Simmon’s guest friendly approach to cooking and
Steve Grant’s experience in running restaurants
Savanna Grill should be a rousing success.
